Japan's prime minister has described the current situation as "the country's worst tragedy since World War 2", whilst the emperor has said he is "deeply worried".
Certainly, never in our working lives have we faced the combination of an earthquake, a tsunami and a potential nuclear meltdown - all taking place in the world's 3rd largest economy.
We cannot, therefore, expect to know what will happen next, or how things will resolve themselves over time. Equally, we cannot yet be clear on the potential second-order effects that will occur, even though these could also have enormous impact on the chemical industry.
Today, the blog therefore simply wants to try and record, as objectively as possible, some key facts as we know them. It will also suggest some possible Scenarios that companies might use to help navigate through these difficult times.
The map above, from the Wall Street Journal, is also a good summary of key areas.
Equally, ICIS news and the Insight team are doing a superb job of trying to keep up with developments. Whilst my blogging colleague John Richardson is also highlighting key developments as they happen.
• We are already seeing major impact in this crucial area. 5 refineries (capacity 1.2mbd), and 11 nuclear plants, are currently offline in Japan. We have no idea when they may return. And, of course, the Fukushima Daiichi Nuclear Power Station remains in a state of emergency.
• This loss of power will not be restored quickly. Already the Tokyo electric company has begun "rolling blackouts" to conserve energy, and it expects these to continue until at least the end of April. This will impact all forms of manufacturing, as well as individuals.
• Japan's loss of capacity means its imports of LNG (liquefied natural gas) and distillate are already beginning to increase. This pushed up European LNG prices by 7% on Monday. Equally, it means refineries elsewhere will focus on distillate production. For petrochemicals, this could mean naphtha will become cheaper, as global gasoline demand will likely remain weak.
Autos: All Japan's auto factories are currently shutdown. This is the first time this has ever happened. Some, such as Toyota's, are now expecting to restart. But nobody can know whether vital components will be available, given the complexity of the various supply chains.
There may well be second-order impact in other regions, because of the supply chain issues. Toyota, for example, has already slowed production in the USA. In Europe, BMW is worried about supplies of electronic displays and navigation systems.
Housing/construction: There could well be a boom in construction, once the current crisis is over. Large numbers of houses and other buildings have been destroyed. But this will also depend on the wider state of the economy. If this weakens further, then major cities might see lower demand for office space, stores and hotel rooms.
Petrochemical/polymer markets Japan is a key supplier of products such as paraxylene and styrene, as discussed on Monday. It may not be easy to immediately replace these exports.
Equally, China relies on Japan for 13% of its imports, whilst Japan is a key supplier of advanced components to Asian nations that specialize in the final assembly phase of manufacturing.
Again, therefore, the key issue is potential supply chain disruption, where the lack of one, perhaps small, component, might stop production on a temporary basis till replacement sources can be found.
Investors have grown used to central banks 'rescuing' us from crises in the past. But events such as the Asian and Russian Crises in the late 1990's, or the current Western financial crisis, are not the same as the widespread loss of life and the destruction of property and factories. The Bank of Japan can provide liquidity to help companies pay their bills. But it cannot wave a magic wand and rebuild what has been lost.
Equally, the cost of reconstruction, perhaps $200bn, will impact Japan's historical role as a supplier of capital to other Regions. It is one of the largest holders of US Treasury bonds, but probably it will need to sell some of these to finance reconstruction. Equally, it had promised to fund 20% of the proposed European bailout fund - but can it still afford to do this?
Plus, of course, we should not forget that this is not the only crisis that we currently face. Major problems continue in the Middle East and N Africa. Saudi troops had to go into Bahrain earlier this week to try and restore order. Whilst it also seems that the blog's fears of potential civil war in Libya may be coming true. Inevitably, however, the crisis in Japan means the world has less attention span and capacity to deal with these.
How should companies respond?Somehow, we have to find a middle way between panic and complacency. One way of perhaps achieving this might be to think in terms of different timescales:
• Short-term recovery. Let us hope that the nuclear issues will be resolved quickly, and that Japan might be on a path towards recovery and reconstruction within a few weeks. Equally, that other second-order impacts are relatively minor.
• Medium-term rebuilding. Perhaps this will not all happen within a few weeks, but may take some months to set in motion. Clearly, the risks of disruption will therefore be higher, plus the potential impact on markets elsewhere.
• Long-term damage. Suppose our worst fears are realised, and a nuclear meltdown does occur? Hopefully, this is a very minor probability. But if it were to occur, it would become such a major priority, that moves towards recovery and reconstruction could be significantly delayed.
Every company will have its own version of these potential Scenarios. Sharing these views internally, and externally with key partners in the value chain, might be very valuable, as something seemingly obvious to one business area or company might be a total surprise to another.
The above are the blog's own thoughts on some of the key issues, as they appear today. The facts reported come from sources known to be usually accurate, but of course nothing can really be guaranteed in today's circumstances. It hopes readers might find them helpful, and will try to update them as the situation develops.